Punjab Cabinet Approves New Excise Policy, With Continued Thrust On Pro-Trade & Pro-Retail Approach
Carrying its pro-trade and pro-retail thrust forward, the Punjab government has come out with its Excise Policy for 2019-20, with focus on breaking the monopolistic trends in the liquor trade and allotment of liquor vends in small groups, in line with the approach adopted last year.
Under the new policy, approved by the state cabinet led by Chief Minister Captain Amarinder Singh, a target of Rs. 6201 crore has been fixed as against anticipated collection of Rs. 5462 crore fixed for the 2018-19.
Disclosing this here today a spokesperson of the Chief Minister’s Office said that as per the new policy, the number of groups would remain the same at 700 (approx), whereas the group size would increase only to the extent of anticipated increase in the revenue. This will ensure participation of small licensees, and the number of liquor vends will also remain almost the same as during the Excise Policy 2019-20.
The licensees have been allowed to carry forward their unsold quota of liquor of 2018-19 to next year i.e. 2019-20 with a nominal fee.
To control smuggling of liquor from neighbouring states, one additional Battalion comprising one IG/DIG of police with SP rank officers at Divisional level and required number of DSPs, along with 50-60 police staff in each excise district, will be created for the Department of Excise and Taxation.
Taking into account the consumption pattern during the year 2018-19, the quota of PML (country liquor) has been increased from 5.78 crore proof litres to 6.36 crore litres i.e. by 10 percent. Similarly, the quota of Indian Made Foreign Liquor (IMFL) has been increased from 2.48 crore proof litres to 2.62 crore proof litre i.e. by 6 percent, and of Beer from 2.57 crore Bulk Litres to 3.00 crore Bulk Litres i.e. by 16 percent.
Till last year, the ex-distillery issue price (EDP) of country liquor was fixed by the Government. For the year 2019-20, the concept of M.R.P. linked EDP has been introduced. With this, market forces will come into play and the distilleries will be able to fix their own rates of their brands.
Bottling fee @ Rs. 1 per litre will be levied, which will generate revenue of approximately Rs. 30 crores. This amount will be allocated by the Finance Department for the purpose of alcohol de-addiction.
To open up the wholesale trade, the fixed license fee for grant of wholesale license of IMFL has been reduced from Rs. 50 lacs to Rs. 25 lacs and a variable fee in the form of additional license fee @ Rs. 3 per proof litre on IMFL and Rs. 2 per bulk on Beer has been levied on the sale of liquor by the L-1 licensee.
In another decision, the cabinet also gave its nod for amendment in the clause C of section 31 of the Punjab Excise Act-1914 in the light of the provisions of the Excise Policy for the year 2019-20 as a regulatory/monitoring measure only.
Further, the Cabinet has given the approval to levy a tax on the sale of liquor against licensees L-3, L-3A, L-4, L-4A, L-5, L-5A, L-5B, L-5C and L-12C, issued under the Punjab Excise Act-1914 in the state under a composition scheme. Notably, the proposed composition scheme is optional, therefore amendment in schedule-A and schedule E is necessitated so that VAT @ 13% +10% surcharge is levied on the licensees who do not opt for the composition scheme.
At present VAT @ 13%+10% surcharge is paid by the distilleries at the manufacturing stage and L-1/L-1 Import licenses at the stage of the sale. Liquor sold against licenses L-2, L-2A, L-2E, L-3, L-3A, L-4, L-4A, L-5, L-5A, L-5B, L-5C, L-9, L-12A, L-12C, L-13 to the extent of special license fee charged, L-14, L-14A, L-14AA or /and L-14B issued the Punjab Excise Act, 1914 is tax free, provided that VAT has been paid in the State of Punjab.
It has been provided in the Excise Policy 2019-20 that VAT @ 5 paise in a rupee be levied on turnover of licenses L-3, L-3A, L-4, L-4A, L-5, L-5A, L-5B, L-5C and L-12C issued under the Punjab Excise Act, 1914 under the composition scheme. The credit of input tax would not be available to the licensees opting for composition scheme. For licensees who do not opt for composition scheme, VAT @ 13.10%+10% surcharge would be levied and the credit of input tax would be available to them. In light of the above, amendments to the VAT Schedules and notification for composition scheme under Section 8E of Punjab VAT Act, 2005 have been proposed.